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Comprehensive Outlook on Macroeconomic Determinants for Renewable Energy in Malaysia

Author

Listed:
  • Nora Yusma Mohamed Yusoff

    (Institute of Energy Policy and Research, Universiti Tenaga Nasional, Kajang 43000, Malaysia)

  • Abdul Rahim Ridzuan

    (Faculty of Economics and Business, Universitas Negeri Malang, Malang 551312, Indonesia
    Faculty of Business and Management, Universiti Teknologi MARA, Melaka Campus, Alor Gajah 78000, Malaysia
    Institute for Big Data Analytics and Artificial Intelligence, Universiti Teknologi MARA, Shah Alam 40450, Malaysia
    Centre for Economic Development and Policy, Universiti Malaysia Sabah, Kota Kinabalu 88400, Malaysia)

  • Thomas Soseco

    (Faculty of Economics and Business, Universitas Negeri Malang, Malang 551312, Indonesia)

  • Wahjoedi

    (Faculty of Economics and Business, Universitas Negeri Malang, Malang 551312, Indonesia)

  • Bagus Shandy Narmaditya

    (Faculty of Economics and Business, Universitas Negeri Malang, Malang 551312, Indonesia)

  • Lim Chee Ann

    (Security Department, Universiti Sains Malaysia, Penang 11800, Malaysia)

Abstract

Mitigating global warming has been a challenge, and policymakers are responding to this issue by strengthening the commitment to enhance the renewable energy target from 20 to 31 percent in 2025 for Malaysia. However, adopting renewable energy in stages based solely on microeconomic factors, such as the price of energy, is insufficient. Thus, it is essential to investigate the macroeconomic variables that influence the share of renewable energy in Malaysia. In detail, this study introduces selected macroeconomic indicators, including gross domestic investment, domestic investment, foreign direct investment, trade openness, urbanization, financial development, and carbon emissions level, and their impact on renewable energy in Malaysia. The study utilized ARDL (Auto-Regressive-Distributed Lag) estimation based on annual time series data spanning 50 years of observations, beginning in 1971 and ending in 2020. Long-run elasticities show that greater economic development and urbanization increase the proportion of renewable energy. In contrast, increased foreign investment, trade liberalization, and carbon emissions could reduce the use of these clean energies. This paper concludes with a policy recommendation that could assist the country in achieving its goal of implementing a low-carbon, renewable energy-focused state policy.

Suggested Citation

  • Nora Yusma Mohamed Yusoff & Abdul Rahim Ridzuan & Thomas Soseco & Wahjoedi & Bagus Shandy Narmaditya & Lim Chee Ann, 2023. "Comprehensive Outlook on Macroeconomic Determinants for Renewable Energy in Malaysia," Sustainability, MDPI, vol. 15(5), pages 1-15, February.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:5:p:3891-:d:1075422
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